4 Easy Ways To Deal With A Pay Cut Or Reduced Income

Are you facing a pay cut or less money? These steps should help you manage the rough times.

When you know you’re going to get a pay cut, how you prepare for it becomes very important. Instead of waiting until your paycheck gets smaller, take steps now to bring your spending in line with what you will be making. This can make the difference between making it through hard times and having to deal with a financial disaster later. Here’s what you should look at:

Be realistic about your essential costs, even if you’re getting paid less.

Before you worry about anything else, make sure that your basic needs are met. Even if you’ve taken a pay cut, lost your job, are on strike, or are locked out, you still need to pay for these things. First, pay your mortgage or rent. Then, make sure you have enough money for food and medical care. If you’ve added to your mortgage payments to get your house paid off faster, now is a good time to talk to your lender and go back to making the base payment. Next, pay your bills and other necessary costs, but don’t buy things or use services you don’t need right now (especially package deals and contracts that renew automatically).

And when you look at your expenses, be honest with yourself. Focus on what you need, not what you want. Avoid using credit cards and only pay with cash, a debit card, or an app that links to a bank account.

If your reduced income and savings aren’t enough to cover your basic living costs, the next step is to find ways to get more cash. In the short term, this could mean taking a look around your house to see if there’s anything you could sell, like a car, electronics, jewelry, antiques, or other assets.

In the middle term, you might want to think about getting a roommate, renting out extra space in your home, or working part-time. Of course, keep in mind that each of these has its own costs and things to think about. For example, you should only take on a second job if you know it will make you money without putting your main job at risk.

Banking, Credit, and Debt When Your Pay Goes Down

Most people don’t want to change how they live when their pay goes down. Therefore they use credit to make up the difference. But this can make it hard to get your finances back on track in the future, even if your income goes back up. As long as your basic living costs are covered, don’t go into debt. Therefore if you don’t know when you’ll be able to pay it off, then do not take it.

If you already have loans or credit cards with a bank or credit union and fall behind on payments, you’ll need to take extra steps to keep the money you do have safe. Your bank or credit union can use the money in your account to pay off debts you owe them. And this is without asking you first. Open a new account at a bank where you don’t owe anything to protect the money you need to live. Even if you are in debt or can’t make a deposit right away, you will be able to do that. Learn more about your rights and responsibilities as a bank customer, and put all of your future money into this new account.

If you can’t pay your bills, it will hurt your credit rating. It will get better when you can start paying again. Not your credit score, but taking care of yourself and your family should be your top priority. But you should tell your creditors about your current situation. They can help you more if you get in touch with them before you get behind on your payments.

Get help to deal with the problems of having less money.

Those who need help can get it from the community. If you’re having trouble making ends meet, don’t be afraid to ask for help at the food bank if there is one near you. Yes, these are scarce in Nigeria, but they do exist. Your place of worship, or any other group you belong to. You can always repay the favor when you’re back on your feet. Also, apply for any services you might be eligible for, such as COVID-19 relief. You can take advantage of any other insurance related to your job.

To get everyone to work together, you might need a family plan. Help younger kids understand that their needs will still be met, but that they won’t be able to do some of the things they want to do right now. Teenagers and young adults can do their part to help around the house or pay for their own things. When things get hard, try to find solutions instead of pointing fingers. You can read this article to find out how to budget with a low income.

What to do if you’re afraid of a pay cut

When your pay goes down, it’s important to change your budget so that your spending matches what you’re making. Click here to read about our guide to personal budgeting. A non-profit credit counseling organization is another community resource that can help you get through this hard time. A professional credit counselor in your area would be happy to answer any questions you have about your finances. They can also help you make a good budget that fits your needs and show you how to deal with any debt you have. Get the support you need right away.